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Exhibit 99.7
Form of Stock Option Agreement
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APPLIED DIGITAL ACCESS, INC.
NOTICE OF GRANT OF NON-QUALIFIED STOCK OPTION
(1996 NON-QUALIFIED STOCK OPTION PLAN)
Notice is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of Applied Digital Access, Inc.
(the "Company"):
Optionee:
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Grant Date:
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Option Price: $ per share
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Number of Option Shares: shares
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Expiration Date:
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Type of Option: Non-Statutory Stock Option
Exercise Schedule:
Other Special Provisions:
Optionee agrees to be bound by the terms and conditions of the Option
as set forth in the Stock Option Agreement attached hereto as Exhibit "A."
Optionee also understands that the Option is granted subject to and in
accordance with the express terms and conditions of the Applied Digital Access,
Inc. 1996 Non-qualified Stock Option Plan (the "Plan"), a copy of which is
attached hereto as Exhibit "B," and agrees to be bound by the terms and
conditions of the Plan.
Optionee hereby acknowledges receipt of the official plan prospectus
attached hereto as Exhibit "C."
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in the Stock Option
Agreement or the Plan shall confer upon the Optionee the right to continue in
the Service of the Company for any period of specific duration or interfere with
or otherwise restrict in any way the rights of the Company or the Optionee,
which rights are
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hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason whatsoever, with or without cause.
APPLIED DIGITAL ACCESS, INC.
By:
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Title:
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OPTIONEE
Address:
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Dated: , 199
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APPLIED DIGITAL ACCESS, INC.
STOCK OPTION AGREEMENT
(1996 Non-qualified Stock Option Plan)
WITNESSETH:
RECITALS
A. Applied Digital Access, Inc. (the "Company") has adopted the 1996
Non-qualified Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees and consultants and other
independent contractors (not including officers and directors) who contribute to
the financial success of the Company or its parent or subsidiary corporations.
B. Optionee is an individual who is to render valuable services to the
Company or its parent or subsidiary corporations.
C. This Agreement is executed pursuant to, and is intended to carry out
the purposes of, the Plan in connection with the Company's grant of a stock
option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement, the Company hereby grants to Optionee, as of the grant
date (the "Grant Date") specified in the accompanying Notice of Grant of Stock
Option (the "Notice of Grant"), a stock option to purchase up to that number of
shares of the Company's Common Stock (the "Option Shares") as is specified in
the Notice of Grant. The Option Shares shall be purchasable from time to time
during the option term at the option price per share (the "Option Price")
specified in the Notice of Grant.
2. OPTION TERM. This option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the expiration date (the "Expiration Date") specified in the Notice
of Grant, unless sooner terminated in accordance with Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither transferable
nor assignable by Optionee other than by will or by the laws of descent and
distribution following the Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
4. EXERCISABILITY. This option shall become exercisable for the Option
Shares in one or more installments as specified in the Notice of Grant. As the
option becomes exercisable for the Option Shares in one or more such
installments, those installments shall accumulate and the option shall remain
exercisable for the accumulated installments until the Expiration Date or the
sooner termination of the option term under Paragraph 5 or 6 of this Agreement.
5. TERMINATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be exercisable) prior to the
Expiration Date should one of the following provisions become applicable:
(i) Except to the extent otherwise provided in subparagraphs
(ii) through (iii) below, should Optionee cease to remain in the
Service of the Company at any time during the option term, then this
option shall not remain exercisable for more than a ninety (90)-day
period commencing with the date of such cessation of Service. Upon the
expiration of such ninety (90)-day period or (if earlier) upon the
specified Expiration Date of the option term, this option shall
terminate and cease to be outstanding.
(ii) Should Optionee die while in Service or within the
ninety (90)-day period following his or her cessation of Service, then
the personal representative of the Optionee's estate or the person or
persons to whom this option is transferred pursuant to the Optionee's
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will or in accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall lapse, and
this option shall terminate and cease to remain exercisable, upon the
earlier of (A) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to remain in Service at any time during the option term,
then this option shall not remain exercisable for more than a twelve
(12) month period commencing with the date of such cessation of
Service. Upon the expiration of such limited period of exercisability
or (if earlier) upon the Expiration Date, this option shall terminate
and cease to be outstanding.
(iv) In no event shall this option be exercisable at any time
after the specified Expiration Date of the option term.
(v) During the limited post-Service period of exercisability
determined in accordance with subparagraphs (i) through (iii) above,
this option may not be exercised for more than the number of Option
Shares (if any) for which this option is, at the time of the Optionee's
cessation of Service, exercisable in accordance with either the normal
exercise provisions specified in the Notice of Grant or the special
acceleration provisions of Paragraph 6 of this Agreement. However, the
number of Option Shares purchasable after the Optionee's death shall be
reduced for any Option Shares purchased by the Optionee after his or
her cessation of Service but prior to death.
(vi) For purposes of this Paragraph 5 and for all other
purposes under this Agreement, the following definitional provisions
shall be in effect:
A. The Optionee shall be deemed to remain in
SERVICE for so long as the Optionee continues to render periodic
services to the Company or any parent or subsidiary corporation,
whether as an Employee, a non-employee member of the Company's Board of
Directors or an independent consultant or advisor.
B. The Optionee shall be deemed to be an EMPLOYEE
and to continue in the Company's employ for so long as the Optionee
remains in the employ of the Company or one or more of its parent or
subsidiary corporations, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and
method of performance.
C. The Optionee shall be deemed to be PERMANENTLY
DISABLED if the Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or to be of
continuous duration of not less than twelve (12) consecutive months or
more, unable to perform his or her usual duties for the Company or the
parent or subsidiary corporation retaining his or her services.
D. A corporation shall be considered to be a
SUBSIDIARY corporation of the Company if it is a member of an unbroken
chain of corporations beginning with the Company, provided each such
corporation in the chain (other than the last corporation) owns, at the
time of determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
E. A corporation shall be considered to be a PARENT
corporation of the Company if it is a member of an unbroken chain
ending with the Company, provided each such corporation in the chain
(other than the Company) owns, at the time of determination, stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
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6. CORPORATE TRANSACTION.
A. For purposes of this Section III, a "Corporate Transaction"
shall be one or more of the following stockholder-approved transactions:
(i) a merger or consolidation in which the Company
is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company in liquidation or
dissolution of the Company, or
(iii) any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to holders different from those
who held such securities immediately prior to such merger.
B. If this option is to be assumed in connection with the
Corporate Transaction or is otherwise to continue in effect, then it shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided that the aggregate
option price payable for such securities shall remain the same.
C. In the event of any Corporate Transaction in which this
option will not be assumed or otherwise continued (after such adjustment as may
be required under paragraph B), the exercisability of this option shall
automatically accelerate so that, immediately prior to the specified effective
date for the Corporate Transaction, it shall become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares. This
option, to the extent not previously exercised, shall terminate upon the
consummation of the Corporate Transaction and cease to be exercisable, unless it
is expressly assumed by the successor corporation or parent thereof.
D. This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES.
A. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, then appropriate adjustments shall be made to (i) the total
number of Option Shares subject to this option and (ii) the Option Price payable
per share in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.
B. If this option is to be assumed in connection with a
Corporate Transaction or is otherwise to continue in effect, then this option
shall, immediately after such Corporate Transaction, be appropriately adjusted
to apply and pertain to the number and class of securities which would have been
issued to the Optionee in the consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price payable per
share, provided the aggregate Option Price payable hereunder shall remain the
same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall not
have any of the rights of a stockholder with respect to the Option Shares until
such individual shall have exercised the option, paid the Option Price for the
purchased shares and been issued a stock certificate for such shares.
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9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, the Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Execute and deliver to the Secretary of the
Company (a) a written notice of exercise (the "Exercise Notice"), in
substantially the form of Exhibit I attached hereto, in which there is
specified the number of Option Shares for which the option is
exercised.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following alternative forms:
1. full payment in cash or check drawn to
the Company's order;
2. full payment in shares of Common Stock
of the Company held by the Optionee for at least six (6) months and
valued at Fair Market Value on the Exercise Date (as such terms are
defined below);
3. full payment in a combination of shares
of Common Stock of the Company held by the Optionee for at least six
(6) months and valued at Fair Market Value on the Exercise Date, and
cash or check drawn to the Company's order;
4. full payment effected through a
broker-dealer sale and remittance procedure pursuant to which the
Optionee (I) shall provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate Option
Price payable for the purchased shares plus all applicable Federal and
State income and employment taxes required to be withheld by the
Company by reason of such purchase and (II) shall provide written
directives to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction; or
5. full payment in any other form which
the Plan Administrator may, in its discretion, approve at the time of
exercise in accordance with the provisions of Paragraph 15 of this
Agreement.
(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option (if
other than the Optionee) have the right to exercise this option.
B. For purposes of this Agreement, the Fair Market Value of a
share of Common Stock on any relevant date shall be determined in accordance
with subparagraphs (i) and (ii) below, and the Exercise Date shall be the date
on which the executed Exercise Notice is delivered to the Company. Except to the
extent the sale and remittance procedure specified above is utilized for the
exercise of the option, payment of the Option Price for the purchased shares
must accompany the Exercise Notice. The procedure for measuring Fair Market
Value shall be as follows:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national stock exchange but is traded on
the NASDAQ National Market System, Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers through the NASDAQ National Market System or any
successor system. If there is no reported closing selling price for the
Common Stock on the date in question, then the closing selling price on
the last preceding date for which such quotation exists shall be
determinative of Fair Market Value.
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(ii) If the Common Stock is at the time listed or admitted to
trading on any national stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question on the
stock exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
(iii) If shares of the series of common stock to be valued at
the time are neither listed nor admitted to trading on any stock
exchange nor traded in the over-the-counter market, then the fair
market value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate, including one or more independent professional appraisals.
C. As soon after the Exercise Date as practical, the Company
shall mail or deliver to or on behalf of the Optionee (or to any other person or
persons exercising this option) a certificate or certificates representing the
purchased shares.
D. In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Company and the
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Option
Shares may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee
shall execute and deliver to the Company such representations in writing as may
be requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
12. LIABILITY OF COMPANY.
A. If the Option Shares covered by this Agreement exceed, as
of the Grant Date, the number of shares of Common Stock which may without
stockholder approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of Article 4, Section III of
the Plan.
B. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
13. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the Service of
the Company (or any parent or subsidiary corporation of the Company employing or
retaining Optionee) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining Optionee) or the
Optionee, which rights are hereby expressly reserved by each, to terminate the
Optionee's Service at any time for any reason whatsoever, with or without cause.
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14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of the Corporate Secretary at the Company's principal
corporate offices. Any notice required to be given or delivered to Optionee
shall be in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Notice of Grant. All notices shall be deemed to
have been given or delivered upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.
15. LOANS. The Plan Administrator may, in its absolute discretion and
without any obligation to do so, assist the Optionee in the exercise of this
option by (i) authorizing the extension of a loan to the Optionee from the
Company or (ii) permitting the Optionee to pay the Option Price for the
purchased Common Stock in installments over a period of years. The terms of any
loan or installment method of payment (including the interest rate, the
collateral requirements and terms of repayment) shall be established by the Plan
Administrator in its sole discretion.
16. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. GOVERNING LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
18. WITHHOLDING. Optionee hereby agrees to make appropriate
arrangements with the Company or parent or subsidiary corporation employing
Optionee for the satisfaction of any Federal, State or local income tax
withholding requirements and Federal social security employee tax requirements
applicable to the exercise of this option.
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EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Applied Digital Access, Inc. (the "Company") that I
elect to purchase _____ shares of the Company's Common Stock (the "Purchased
Shares") pursuant to that certain option (the "Option") granted to me under the
Company's 1996 Non-qualified Stock Option Plan (the "Plan") on _________, 199_
to purchase up to __________ shares of such Common Stock at an option price of
$____ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the Secretary
of the Company, I shall pay to the Company the Option Price for the Purchased
Shares in accordance with the provisions of my agreement with the Company
evidencing the Option and shall deliver whatever additional documents may be
required by such agreement as a condition for exercise.
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Date Optionee
Address:
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Print name in exact
manner it is to
appear on the stock
certificate:
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Address to which
certificate is to be
sent, if different
from address above:
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Social Security Number:
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